Salaries at Provincial Agencies

Recent articles 2017

Background

Controversy continues to swirl around salary levels at Alberta’s agencies, boards, and commissions (ABCs). An article in The Globe and Mail by Justin Giovannetti [spending-at-provincial-agencies-out-of-control24-9-16-gm] two weeks ago incorrectly identified the salary of the President and Chief Executive Officer of the Workers’ Compensation Board as the highest of provincial ABC executives. A tabulation by Albertarecessionwatch.com of the largest and most critical ABCs in the financial, health, energy, and post-secondary sectors shows that WCB CEO Guy Kerr ranks 20th among his ABC colleagues.

The misunderstanding is based on confusion about the implementation of the Public Sector Compensation Transparency Act and Public Sector Compensation Transparency General Regulation (General Regulation). This new legislation is similar to that found in other provinces such as Ontario and British Columbia known as “sunshine legislation” or the “sunshine list.” The Alberta legislation builds on measures taken by the Stelmach and Redford governments to release expense claims of government ministers and senior officials. Online salary disclosure for 2015 starts at $104,751 for Government of Alberta employees and $125,000 for ABCs and includes both base salary and severance. The reporting consists of all compensation and severance and non-monetary benefits which include employers’ pension, EI and CPP contributions. All members of the boards of ABCs are also covered with no compensation thresholds.

However, these measures supplement existing requirements under a 1994 Treasury Board directive (now the Fiscal Management Act) which directed departments and provincial agencies to disclose the compensation of their most senior executives. Thus we have a track record of executive compensation of top executives- normally the most highly remunerated- for two decades.

Under the relatively new General Regulation, compensation levels of employees of certain agencies- the Alberta Investment Management Corporation (AIMCo); Alberta Treasury Branches (ATB Financial) and its subsidiaries; and the Alberta Teachers’ Retirement Fund Board (ATRF) are exempt from salary disclosure. But, as noted, the compensation of top executives at these agencies has been, and continues to be, available going back two decades. According to a 27 April 2016 news release, Justice Minister Ganley justified the exemption as “consistent with the best practices in other public sector financial agencies…. and provide a level playing field between agencies and their private sector counterparts, while ensuring Albertans continue to be served by the top talent in the highly competitive financial industry.”

The complexity of executive compensation depends on the nature of the organization and peer groups in the industry selected by those who recommend and decide executive compensation levels. This is particularly true for the exempted agencies. As the summary table below shows, AIMCo has the most executives in the highest paid category. AIMCo also has the best disclosure on executive compensation by far of any of the agencies (18 pages). (The Alberta Teachers Retirement Fund also has fairly good disclosure of its compensation philosophy and mechanics.)

For ATB Financial, ATRF, and AIMCo, executives are compensated in four basic ways: 1) base salary; 2) annual compensation bonuses or variable pay; 3) long-term incentive plans; and 4) pensions and other post-employment benefits. At AIMCo, executives may also receive a grant for a special long-term incentive plan triggered when a “stretch goal” for the 4-year Long-term Incentive Plan has been exceeded.

Most employers also make contributions for Employment Insurance, Canada Pension Plan as well as pension and supplemental registered pension plans. Other benefits may include dental coverage, vision care, disability insurance, and group insurance. Often the CEO is provided with a car which may, or may not, depending on the agency, be included in total compensation. Some ABCs provide perquisite allowances, club memberships, and professional fees. The devil is in the details.

The summary table below covers total compensation over $500,000 in 2016 and total compensation in 2015. For certain executives, there is no comparable 2015 data since they were not employed in the previous fiscal year. For NAIT, SAIT and MacEwan University the financial statements are for the year ending 30 June 2015, the most recent numbers available. Workers’ Compensation Board and ATRF statements are for the fiscal year ending 31 December 2015.

Since executive compensation has become a highly specialized area, the numbers from the tables are taken from the audited financial statements of the organization concerned. There are many footnotes explaining the cash payments, cash benefits and non-cash benefits. The presentation format varies considerably between institutions especially as to detail. The following PDF documents are extracts from the 2015 or 2016 notes to financial statements and annual reports for the 16 agencies reviewed.

In addition to the financial statements and annual reports, the online compensation disclosure for these agencies was reviewed and an additional ten individuals were identified with compensation and benefits as reported totaling more than $500,000. These individuals were from universities or Alberta Health Services. Numbers reported are for the 2015 calendar year.

Albertarecessionwatch.com contacted either the Chief Financial Officer or Chief Human Resources Officer of the 16 agencies with executives on the list on 2 and 3 October requesting a review of the table. At the time of posting only ten agencies (Workers’ Compensation Board (WCB), the Alberta Securities Commission, NAIT, Grant MacEwan University, Alberta Health Services, Agriculture Financial Services Corporation (AFSC), ATRF, AIMCo, ATB Financial, and the Alberta Petroleum Marketing Commission) had responded. Responses varied from helpful corrections (and there were several) from three agencies, two conversations with CEOs, to unhelpful referrals to the financial statements without comment on the numbers and classification presented in the table.

The ranking below reveals that while base salaries in the executive ranks of Alberta’s ABCs range roughly between $250,000 to $600,000, total compensation at the financial corporations is often multiples of the base salary through annual bonuses and long-term incentive plans. In the energy-related commissions, base salaries are high but bonuses rare or non-existent. In the post-secondary sector, the most senior administrators receive base pay of upwards of $500,000 while pension and special leave entitlements may produce compensation approaching the $900,000 range.

A key policy issue for the government in determining how to shave executive salaries provided for in Bill 19 is to ensure adequate disclosure across all agencies. For post-secondary institutions and the Alberta Securities Commission (ASC), no compensation discussion and analysis (CDA) is provided. This is true for the energy ABCs and at the WCB. At ATB Financial, the CDA is three pages which compare unfavourably with AIMCo, ATRF, and chartered bank disclosures that typically run over 40 pages. In the case of ATB, key metrics are not provided on the long-term incentive plan. For example, AIMCo spells out corporate objective performance and asset class performance over a four-year period. For ATB, short term incentive payments on based on “revenue generation and operational effectiveness, customer measures, and employee engagement scores,” but does not indicate specifically the percentage of each factor.

For all agencies there is no disclosure on what peer groups the board has used to determine salaries. These deficiencies remain despite recommendations from the Auditor General going back to 2008.

Severance or payments derived from a termination clause were observed in a three cases.

Total Compensation of Executives of Alberta Agencies, Boards and Commissions ($000s)

Rank

Position title

Organization

Name

Base Pay

Grand Total- 2016

2015

Difference 2016/2015

1

President and chief executive officer

ATB Financial

Dave Mowat

504

2724

3138

-15%

2

Chief Investment Officer

AIMCo

Dale McMaster

387.5

2197.3

2050

7%

3

President and chief executive officer

AIMCo

Kevin Uebelein

500

1971.3

N/A

4

Executive Vice-President -Private Markets

AIMCo

Robert Mah

333.5

1792.3

1549.5

14%

5

Chief Risk Officer

AIMCo

John Osborne

220.2

1599.8

1129.1

29%

6

Former President and CEO

AIMCo

Leo de Bever

1500

3728.4

-149%

7

Chief Client Relations and Legal Officer

AIMCo

Darren Baccus

259.8

1489.7

1169.3

22%

8

Chief Investment Officer

Alberta Teachers’ Retirement Fund

Derek Brodersen

315

1279.5

1065.8

17%

9

Former Chief Executive Officer

Alberta Teachers’ Retirement Fund

Emilian Groch

291

1181.6

1705.5

-44%

10

Senior Vice-President, Public Markets

AIMCo

Peter Pontikes

260.4

1136.6

985.7

13%

11

Chief Corporate and Human Resources Officer

AIMCo

Angela Fong

285.3

1132.1

799.5

29%

12

Senior Vice-President, Fixed Income

AIMCo

Sandra Lau

260.4

1058.1

966

9%

13

Chief strategy and operations officer

ATB Financial

Curtis Stange

317

1054

1265

-20%

14

Executive Vice-President, Business and Agriculture

ATB Financial

Wellington Holbrook

302

973

1045

-7%

15

President and Vice-Chancellor

University of Calgary

Elizabeth Cannon

480

943

895

5%

16

President and Vice-Chancellor

University of Alberta

David Turpin/

Indira Samarasekera

547

888

N/A

17

Executive Vice-President, Corporate Financial Services

ATB Financial

Ian Wild

318

877

1099

-25%

18

Chief Financial Officer

AIMCo

Jacqelyn Colville

274.1

873.1

792.8

9%

19

Chief Financial Officer

ATB Financial

Bob McGee

252

866

N/A

20

President and chief executive officer

WCB

Guy Kerr

466

863

865

0%

21

Head, Private Investments

Alberta Teachers’ Retirement Fund

Rakesh Saraf

278.3

851

801.3

6%

22

Chief Risk Officer

ATB Financial

Bob Mann

285

823

1083

-32%

23

Executive Vice-President, Retail Financial Services

ATB Financial

Rob Bennett

267

807

840

-4%

24

Chief People Officer

ATB Financial

Lorne Rubis

287

789

918

-16%

25

Head, Real Estate

Investments

Alberta Teachers’ Retirement Fund

Barry Petursson

256.6

786.9

747.8

5%

26

Vice-President Research

University of Alberta

Lorne Babiuk

506

782

768

2%

27

Vice President, Facilities and Operations

University of Alberta

Don Fleming

479

768

706

8%

28

Vice-President, Finance and Admin.

University of Lethbridge

Nancy Walker

332

751

314

58%

29

Professor a)

University of Calgary

Stephen L. Bryant

705.9

737.5

Not available

30

President

ATB Investor Services

Chris Turchansky

252

733

N/A

31

President and chief executive officer

Alberta Energy Regulator

Jim Ellis

529

725

710

2%

32

Vice-President, University Relations

University of Alberta

Debra Pozega Osburn

384

722

511

29%

33

Senior Vice-President, Operations

AIMCo

Michael Baker

242

719

345.9

52%

34

Senior Portfolio Manager, Equities

Alberta Teachers’ Retirement Fund

Charlie Kim

238

714.1

716

0%

35

President and Managing Director

Agriculture Financial Services Corporation

Brad Klak

518

698

632

9%

36

President and Vice-Chancellor

University of Lethbridge

Mike Mahon

428

687

658

4%

37

Senior Vice-President, Reputation and Brand

ATB Financial

Peggy Garrity

267

676

788

-17%

38

Vice-President, Finance and Admin.

University of Alberta

Phyllis Clark

469

672

696

-4%

39

Executive Director

Alberta Securities Commission

David Linder

379

659

619

6%

40

Vice- Chair

Alberta Securities Commission

Stephen Murcison

375

636

560

12%

41

Chief Executive Officer

Alberta Petroleum Marketing Commission

Richard Masson

630

635

635

0%

42

President and Chief Executive Officer

Southern Alberta Institute of Technology

David Ross

352

631

606

4%

43

Chief Executive Officer

Alberta Teachers Retirement Fund

Rod Matheson

276

623.5

N/A

44

Interim President, and Chief Medical Officer

Alberta Health Services

Verna Yiu

522

614

616

0%

45

Vice-President, Operations and Chief Information Officer

WCB

Wendy King

360

609

621

-2%

46

Professor a)

University of Alberta

Randall Morck

542.7

581

Not available

47

Professor a)

University of Alberta

Carlo Montemagno

538.3

576.1

Not available

48

Provost and Vice-President, Academic

University of Calgary

Dru Marshall

413

571

562

2%

49

President and Chief Executive Officer

Northern Alberta Institute of Technology

Glenn Feltham

309

570

576

-1%

50

Chief Financial Officer

WCB

Ron Helmhold

341

569

569

0%

51

Provost and Vice-President, Academic

University of Lethbridge

Andrew Hakin

353

569

518

9%

52

Vice-President, Community Engagement and Commun.

Alberta Health Services

Carmel Turpin

237

560

150 (7)

53

Vice-President Academic

Southern Alberta Institute of Technology

Lee Haldeman

/Brad Donaldson

186

555

1221

-120%

54

Chief Financial Officer

ATB Financial

Jim McKillop

285

553

1083

-96%

55

Zone Medical Director a)

Alberta Health Services

Kevin Worry

483.5

543.8

Not available

56

Chief Executive (a)

Alberta Utilities Commission

Robert Heggie

464

543.0

Not available

57

Vice-President, Research

University of Calgary

Ed McCauley

391

539

529

2%

58

Professor a)

University of Alberta

Carl Amrhein

498.5

538.1

Not available

59

Vice-President , Student Services

MacEwan University

Cathryn Heslep

193

536

279

48%

60

Vice-President, Human Resources

Alberta Health Services

Todd Gilchrist

406

529

N/A

61

Physician a)

Alberta Health Services

Peter Craighead

457.6

527.9

Not available

62

Vice- Chair

Alberta Securities Commission

Tom Cotter

412

526

469

11%

63

President and CEO

Alberta Health Services

Vicki Kaminski

462

525

547

-4%

64

Executive Vice-President, Operations

Alberta Energy Regulator

Kirk Bailey

317

524

449

14%

65

Vice-President and Medical Director, Northern Alberta

Alberta Health Services

David Mador

452

522

547

-5%

66

Vice President and Medical Directora)

Alberta Health Services

Francois Belanger

448.3

517

Not available

67

Chair a)

University of Alberta

Xin Min Li

478.1

512.8

Not available

68

Chief Legal Officer

AIMCo

Rod Girard

180.2

511.0

361.4

29%

69

Chair

Alberta Utilities Commission

Willie Grieve

348

509

479

6%

70

Lab Pathologist a)

Alberta Health Services

Mireille Kattar

475.7

507

Not available

Totals

25863

57763.12

47330

Notes: All amounts in $000s. N/A not applicable.

NAIT, Grant MacEwan and SAIT year ends are 30 June 2015. ATRF and WCB for year ending 31 December 2015.

Pensions

Another important element of compensation is pension contributions and the annual cost of the pension promise. Many senior executives do not have pension plans per se. Some, like Dave Mowat of ATB enter into “other post-employment benefit plans” (OPEB). The contributions corporations must make to honour the promise can be very substantial. The analysis includes this information as well as the change in the value of estimated future payouts for AIMCo executives during the fiscal year.

Many executives who do not belong to a defined benefit plan (DB plan) make contributions to defined contribution plans (DC plan) whose sums are typically matched by their employer. Another common benefit is the supplemental retirement pension plans offered to most management employees and is used to top off DB or DC plans that are capped under the Income Tax Act. These plans are typically non-contributory and increase post-employment pension entitlement based on the employees base salary.

Gender

Of the 70 individuals identified, 15 are women. The highest paid woman is Angela Fong, AIMCo’s Chief Corporate and Human Resources Officer at number 11 with total compensation of $1.058 million. Sandra Lau, the Senior Vice-President of Fixed Income with AIMCo follows at number 12. University of Calgary President and Vice-Chancellor, Elizabeth Cannon, is next at number 15.

Financial Expertise

The prevalence of financial sector employees in the list is startling. Of the 69 listed, 11 are from AIMCo, ten from ATB Financial, six from the ATRF, three from the ASC, and one from Agriculture Financial Services Corporation. Thus nearly one half of the highest paid executives come from the financial sector. AIMCo executives make up nine of the top ten earners. Of the top 20 positions, only three were not from the financial sector and arguably the WCB head, given the importance of investment performance and insurance aspects, could be considered financial. And, given the exemptions afforded AIMCo, ATB, and ATRF, is would be highly probable that perhaps a dozen or more senior managers would be included in this league of total compensation over one-half million dollars.

Besides the financial sector, senior administrators and professors from post-secondary institutions accounted for 20 or nearly one-third of the survey. Typically the President, Provost and Vice-President Academic, and the Vice-President, Research made the list. Besides senior administrators, four professors made the list. Alberta Health Services (AHS) where controversy over executive salaries surfaced in the Calgary and Capital (Edmonton) Health Regions in the early 200os, ranked lower in the survey with the top AHS official at number 44. There were nine executives from AHS on the list or about 13 per cent.

Those with the highest base salaries are with agencies of the Ministry of Energy. Base salary for the CEO of the Alberta Petroleum Marketing Commission is $635,000 and $539,000 for the President and CEO of the Alberta Energy Regulator.

The complete chart is available in PDF below. Note that some of the cells contain comments that add explanation to the general headings used in this comparison.

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About albertarecessionwatch

Former Director, Institute for Public Economics, University of Alberta and currently Fellow of the Institute. Former executive with Alberta Treasury Branches. Worked for the Alberta government for 12 years with Federal and Intergovernmental Affairs and Alberta Treasury. Areas of focus: financial institutions legislation and policy, government borrowing, and relations with credit rating agencies. Ph.D in Political Science (Uof A), Masters of Public Administration and BComm. (Carleton University). Author of Politics and Public Debt: The Dominion, the Banks and Alberta's Social Credit. Presently working on study of Alberta provincial agency board appointments.